The Economics of Displacement

As the impacts of sea-level rise intensify and developers look to higher ground to build new projects, Miami’s low-income communities of color are at risk of displacement, particularly to climate-vulnerable neighborhoods.

— A Snapshot of Potential Environmental and Social Costs of the Proposed Little Haiti Development, Earth Economics

POTENTIAL ENVIRONMENTAL AND SOCIAL COSTSOF THE MAGIC CITY INNOVATION DISTRICT

The Magic City Innovation District (“Magic City”) is a seventeen-acre development slated to be built in the Little Haiti neighborhood of Miami. While the development may attract additional investment and benefits for new residents and businesses that move to the area, there is growing concern about the potential negative environmental and social impacts of the project, including economic displacement of residents who have historically resided and worked in Little Haiti, the majority of whom are low-income families of color. Without taking the time to establish a complete picture of the project’s environmental and social costs and benefits, Magic City Innovation District runs the risk of perpetuating economic and racial inequities across Miami communities and contributing to unsustainable development practices that threaten Miami’s long-term resilience.

Using the Magic City Innovation District and Little Haiti as a case study, this project examines and raises awareness of the potential environmental and social costs of land use and economic changes associated with re-zoning and urban development. While gentrification of neighborhoods like Little Haiti generate economic benefits for developers and many homeowners and businesses, the costs incurred by low-income communities of color in the form of relocation, increased exposure to climate hazards, and disrupted social networks, are significant and measurable.

what happens when a household is displaced?

The impacts of displacement are well documented − everything from upfront relocation costs, to increased commuting costs, to to the cost of increased flood risk. Using publicly available datasets, the average financial cost of displacement to a Little Haiti household can be estimated.

upfront relocation costs

The cost of relocating to a new home is a significant and immediate burden. Not only do households incur the direct costs of moving but may also face opportunity costs and disruption to work associated with finding temporary or permanent housing. Additional costs include potential loss of security deposit and the cost of dealing with eviction procedures.

commuting costs

When facing displacement, households have a high likelihood of moving to a new neighborhood or municipality. Displaced households’ new neighborhoods on average have fewer job opportunities and require longer and more costly commutes. For example, low-income households living in North Miami and North Miami Beach generally have longer commutes than low-income households in Little Haiti, according to public data.

flooding related costs

Displaced households often move to areas with poorer environmental conditions. In Miami, higher-elevation neighborhoods are being gentrified as lower elevation neighborhoods with higher flood risk are less and less desirable. Flooding events not only damage property − they also generate significant social cost, including mental anxiety and disruption to work productivity.

The Cost of Displacement for Little Haiti Households

Household income and housing-cost burden (spending >30% of income on housing costs) is a useful indicator of displacement risk. Using this indicator, it can be assumed that 3000+ Little Haiti households will face risk of displacement in the coming years, especially if new market-rate housing such as the Magic City project continue to be built. Once displaced, a household faces additional costs for many years into the future.